New Costs From Health Law Snarl Union Contract Talks

Workers and Employers Tussle Over Who Should Pay for New Costs Tied to Affordable Care Act

Click here to read the WSJ. Excerpts:

"Unions and employers are tussling over who will pick up the tab for new mandates, such as coverage for dependent children to age 26, as well as future costs, such as a tax on premium health plans starting in 2018. The question is poised to become a significant point of tension as tens of thousands of labor contracts covering millions of workers expire in the next several years, with ACA-related cost increases ranging from 5% to 12.5% in current talks."

"Labor experts on both sides say the law doesn't take into account that health benefits have been negotiated by employers and unions over decades, and that rewriting plans to meet new requirements can affect wages and other labor terms."

"...unions have unsuccessfully tried to win concessions from the Obama administration on some issues now involved in the labor talks."

"higher costs of new mandates, especially the requirement that health plans expand coverage for dependents."

"Uncertainty about future costs is also hampering negotiations. One of the biggest looming unknowns is the so-called Cadillac tax on high-cost health plans scheduled to take effect in 2018. The provision imposes a 40% tax on the annual cost of health care above $10,200 for individual coverage and $27,500 for family coverage.

The regional transit system in Philadelphia, Septa, estimates the tax will boost its health-care costs by $15 million a year, or 12.5% of the $120 million it currently spends each year on health coverage."

"Union officials say the law penalizes so-called union-sponsored multi-employer health plans, which are jointly run by unions and primarily small employers,"

"People in those plans aren't eligible for the subsidies toward the cost of premiums that the law offers some people buying coverage on their own. And many multi-employer plans also must pay a $63 tax this year per covered individual to help subsidize plans sold through the new insurance exchanges. Unions and large employers had campaigned against the fee, which drops to $44 in 2015. Under regulations released in March, some labor unions and businesses will get a break, but union officials have said the vast majority of its plans don't fit the definition required to qualify."

"Another provision of the law that eliminates caps on annual and lifetime health-care costs has forced multi-employer plans to purchase their own insurance to prevent potential runaway costs from bankrupting plans."

"these provisions have increased construction-industry health plans' costs by 5% to 10%, and already resulted in lower wages for some laborers."

"In other cases, the law has resulted in some workers losing coverage from multi-employer plans. Last year, the United Food and Commercial Workers agreed to eliminate existing coverage for thousands of newer part-time workers at New England supermarkets, in order to preserve benefits for full-time workers."

"the union has agreed to several supermarket contracts that eliminate health coverage for certain members' spouses who have coverage available elsewhere."